Question

Homer Simpson finds himself in a panic attempting to meet the April 15th tax deadline. If Homer and his wife have an income of​ $60,000, earned​ $1200 in​ interest, invested​ $2500 in a​ tax-deferred savings​ plan, and have a total of​ $12,000 in exemptions and​ deductions, what would be his taxable​ income

Answer 1

As given, Income of Homer and his wife = $60000

Interest earned = $1200.

Adding this to total income, we have total taxable amount = 60000+1200 = $61200

Now, investment in tax deferred savings plan = $ 2500

This amount will be subtracted from total taxable income, so amount becomes = 61200-2500 = $58700

We will also subtract the exemptions and deductions = $12000

Amount becomes = 58700-12000 = $46700

Hence, Net taxable income is $46,700